People who allow news stories to influence their investment choices may as well park their portfolios at the intersection of a train wreck. This is always true. Here are examples of why it's true during the past 24 hours.
These quotes refer to the stock market, and Fed Chairman Bernanke's July 13-14 testimony to Congress.
- "Stocks jump as Bernanke details possible stimulus" (AP, July 13)
- "Stocks gain for first session in four on Bernanke" (MarketWatch, July 13)
- "Wall St snaps 3-day drop with Bernanke's help" (Reuters, July 13)
- "Bernanke Says Fed Would Consider New Stimulus" (New York Times, July 13)
- "Bernanke told lawmakers that the Fed was not taking more action to stimulate the economy. That cut short a morning rally." (AP, July 14)
- "Wall St flat as Fed comments offset earnings hope" (Reuters, July 14)
- "US stocks weaved between gains and losses Thursday afternoon after Federal Reserve Chairman Ben Bernanke deflated investors' stimulus hopes..." (Dow Jones, July 14)
- "Stocks erase gains as Bernanke dims stimulus hopes" (USA Today, July 14)
There are many hundreds of other headlines and stories on this topic, but they all say the same thing: stocks went up, or down, or sideways because of what Ben Bernanke said.
Mind you, these are just the stock market; I could show a similarly schizophrenic string of quotes which say oil and currency prices went up, or down, or sideways on "Bernanke's remarks..."
Alas, most investors who read one or two of those individual news accounts above will not see the folly. They take it at face value. Untold numbers of them got in on Bernanke's "bullish" comments, and/or got out on his "bearish" words.
It can be otherwise for you. Step away from the herd. Be independent. Find your own opportunities. Begin today.
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